Situational awareness: You might have noticed that the stock market was volatile this week, and also fell quite a lot, while bond yields rose. That would normally reduce the odds of a Fed hike, since the market is basically doing the Fed's job for it.
Illustration: Lazaro Gamio/Axios
There's $500 trillion of wealth on planet Earth, give or take: Maybe $230 trillion in land and property, $200 trillion in debt and $70 trillion in equity.
The big picture: Nordhaus won the Nobel Prize this week, in an announcement that coincided with the release of a hugely important UN Intergovernmental Panel on Climate Change report on what will happen to the world when it gets 1.5°C, or 2.7°F, warmer than preindustrial levels.
The bottom line: Human civilization has reached the very end of reaping the dividends from a stable climate. Compared to recent decades, the world in 2100 will have a 13% reduction in crop yields (and those crops will also be less nutritious); it will also have 2.8 billion more people at risk from drought in any given month.
Illustration: Lazaro Gamio/Axios
Preventing extreme global warming will be neither cheap nor easy. Just for starters, we will need to spend about $2.4 trillion per year on energy investment between now and 2035, overwhelmingly targeted at renewables.
The bottom line: Both Nordhaus and the IPCC report make clear that we will have to tax carbon. That incentivizes investment in alternatives, while deliberately making our current carbon-heavy lives less sustainable.
It feels like the Cold War is back. States are engaging in shadowy extrajudicial killings on foreign soil, even as the world watches the rise of authoritarian strongmen like Rodrigo Duterte, in the Philippines, and Jair Bolsonaro, in Brazil.
Driving the news: Big business also loves China and (at least until this week) Saudi Arabia. Neither country has ever had democracy, and both are major human rights abusers.
The bottom line: It's very easy to proclaim oneself a believer in "responsible capitalism." But when forced to make a choice, business tends to stick with anything that looks profitable.
US corporate debt continues to hit new all-time highs. The chart above shows how little operating income (technically, nonfinancial companies' funds from operations) supports the median American company's ever-growing debt load.
"Given where we are in the credit cycle, there are concerns about how and when prevailing conditions will turn. Such a change could spark bouts of strong volatility and periods of rapidly rising financing costs and illiquidity — limiting borrowers' financial flexibility — giving rise to increased defaults."— Jacob Crooks and David Tesher, S&P Global Ratings
A particularly gruesome example of overindebtedness can be found in West Africa.
The bottom line: In 2018, a majority of Ghana's government revenues will be spent just on servicing the country's foreign-currency-denominated debt, per the Jubilee Debt Campaign.
The big question: What will happen when the current IMF program ends in April? New loans, from the IMF or anybody else, are unlikely to be the answer when the problem is that Ghana already has too much debt.
America has no insider-trading statute. Former U.S. attorney Preet Bharara would like to change that.
The real victims of the release of inside information are, perhaps, to be found not in financial markets but rather in the wine world. Twenty-three master sommeliers have been stripped of their title after one of their peers "disclosed confidential information pertinent to the tasting portion of the 2018 Master Sommelier Diploma Examination prior to the examination."
Meanwhile, at Sotheby's, Artnet News columnist Kenny Schachter found himself sitting in front of Russian investor Alex Greenberg as Greenberg got caught up in the theater of a live auction and ended up spending $12.4 million on a large Jenny Saville nude, even in the face of his increasingly frantic art adviser telling him to stop bidding. Schachter perfectly sums up how market failures happen in the auction room:
"It was an expensive testosterone-fueled checkers match (chess would be too generous) of one-upmanship. Who won? The auction house and consignor. ... You could sense the infectious tenseness, the spigot opening on the dopamine flow — until the bill arrives and buyer’s remorse sets in. 'I’ll stop, I’ll stop,' Greenberg assured his hapless consultant. Yeah, right. When all was said and done, they could both be seen figuring out the fat auction premium on their phone calculators. A dose of reality."— Kenny Schachter, Artnet News
Fun fact: No art dealer has ever been convicted of money laundering in America.
Residential construction in Ordos, Inner Mongolia. Photo: Ed Jones / Getty
China has spent 3.2 trillion yuan so far — that's $463 billion — tearing down substandard old dwellings and replacing them with brand-new tower blocks.
For a great indication of how much the Trump brand is worth, look no further than the retail price of the New World Red Reserve wine from Trump's very own winery in Monticello, Virginia.
You remember Oct. 10. It was a big day in the markets: The S&P 500 imploded, falling as much as 7.7% intraday.
I'm talking about Oct. 10, 2008, when the stock index closed at a level of 899. It's fun to look at the forward returns from that date:
Behold, an $850 nylon fanny pack from Balenciaga, emblazoned with the name and logo of the World Food Programme. If you buy it, $85 goes to the WFP.
Mecca's $15 billion Abraj Al-Bait Tower is the world's most expensive building. It's also one of the tallest buildings in the world, rising to 1,972 feet. The little black speck behind them is the Kaaba, the the most sacred site in Islam; the cube is about 40 feet high.
The towers were built on the site of a 1781 Ottoman citadel. In order to construct this hotel, not only was the fortress destroyed, but also the hill it sat atop.